How to have your cake and eat it too
Posted by Brent Dixon on May 1st, 2007
Credit unions have the benefit of being a part of a close-knit powerful network, the credit union industry as a whole, while being tightly woven into the communities they serve at the same time. This opens up huge opportunities for competing with banks and other financial institutions at every single level.
COMPETING BIG
Why do people choose large banks like Wells Fargo, Chase, and B of A? I’d argue that a large part of that is accessibility. They want access to the same services, branches, and ATMs across the country. When I moved to from Houston to College Station for school, I moved my money from Energy Capital Credit Union to Wells Fargo. I knew that college would be a mobile time – I’d be visiting family at home, friends at other schools, going on trips in the summer, etc. I knew I’d be able to access Wells Fargo pretty much anywhere I went.
I had absolutely no clue about the Shared Service Centers, the Co-op Network, and the depth of service they offered. Credit unions, although appearing more disjointed and less accessible, are actually kicking banks’ collective tail when it comes to POS access. Chase markets the heck out of the 8,500 ATMs nationwide. The credit union co-op network has 25,000.
Yesterday, I needed to grab a cashier’s check from my FORUM account. I was at a Starbucks. I literally looked out the window, saw a GHCU branch, and they were on the network. My credit union (and office), is in Indianapolis, I live in Dallas, I’m in Seattle right now. I couldn’t do this if it weren’t for the network credit unions have created.
Credit unions can compete on geographic convenience. They can compete big where big matters. Right now, communication of this is effectively nil. You folks should be shouting it from the rooftops.
This message is where large-scale cooperative advertising can really make a difference.
competing small
Credit unions have the benefit of deeply understanding, at the executive level, the community they are serving. This could mean the SEG or local area. Either way, because individual credit unions are relatively small, this gives them agility to react quickly to the needs of their community.
The Lower East Side People’s FCU (disclosure: they’re a client of ours) has several products that no big bank could have, or would have, pulled off. This includes low-income, cooperative housing loans and a matched education savings account (LES matches savings dollar-for-dollar). LES People’s FCU was created when all of the banks gave up and left the Lower East Side of New York. They are the community, and you can tell.
Vancity’s ChangeEverything is, as always, a great example. Let’s change our community, our city. It’s ours, not theirs. Not one single big bank can ever say “We are Vancouver! Let’s fix it, because it belongs to all of us!”
FORUM’s CGM campaign is an example. Yes, a large bank can say “upload a video of your story and why you love us to YouTube, and we’ll make an ad out of it!” But there is something completely different about FORUM’s campaign – a mass of members lined up at their actual headquarters, some are passionate about FORUM, some just want to be on TV, but all of them are spending the day together, with FORUM, because FORUM brought them together to be a part of the message.
Seth Godin spells it out like this (from “Small is the New Big“):
Small means the founder makes a far greater percentage of the customer interactions. Small means the founder is close to the decisions that matter and can make them, quickly.
Small is the new big because small gives you the flexibility to change the business model when your competition changes theirs.
Small means you can tell the truth on your blog.
Small means that you can answer email from your customers.
Best of both worlds
Through a combination of their cooperative network and individual agility, credit unions can both compete huge and compete small in a way that no other financial institution can. It’s just a matter of rallying together and understanding what about huge and small will make them outstanding.
(Tip-of-the-hat to Ross Graham from Eli Lilly FCU for the good conversation about this topic over the past couple of days.)
You go, Boy! And let’s not forget the “non-transactional” value added that can really set CU’s apart (when they do it right)—-EDUCATION! Candidly, I’d rather leverage with a non-product differential than go head to head on commodities. Financial Literacy is a hot, hot topic currently. Talk about one heck of a “wellness” strategy. But like always…if the CU’s don’t do it right, someone else will.
“Why do people choose large banks like Wells Fargo, Chase, and B of A?”
I would argue, Brent, that its because of “passive decision making”. Big banks are the “easy” choice. They’re on every corner, it’s easy to set up direct deposit, we don’t think they’re going out of business anytime soon. It’s the “safe” choice, and the choice that’s often made when a customer doesn’t want do the work to really evaluate the options available.
CUs like LESP FCU (unfortunately) can’t compete solely on the basis of differentiated and even superior products.
CUs should make a concerted effort to: 1) train consumers to research their financial decisions more thoroughly, and 2) get consumers more involved in the management of their financial lives (which I believe will lead to more thorough research, evaluation, and decision making.
Financial apathy is CUs biggest enemy. (And no amount of banker spank is going to cure that).
When ValleyStone CU announced entrance into a Shared Branch network, I had a local bank executive call me to ask if he had really read that we just hooked into the capability of 2,400 branches thoughout the USA. He had just left a senior management meeting at his bank and our news was part of their agenda. I had to send him a copy of the press release to bring back to his meeting.
The network is allowing us to expand, without losing that individual smallness advantage!
Brent – I think that “Competing Big” is exactly why the Colorado CU Association is really focusing on ATM access in their – newly launched – campaign targeting Gen Y for credit union awareness…
Visit creditunionfacts.com for their approach…
I think part of the problem is that credit unions haven’t figured out what really makes them ‘different’.
When we do have something working for us (like the volume of ATMs available) we don’t seem to know how to go out and just say it.
Credit unions need to show the value of membership, what their credit union has done for others (not just talk about the fact that you can do it) and start working with consumers to help them make effective financial decisions.
I had an experience like this a short time ago where I asked someone to define ‘what makes us different’. After you take out the broad statements, you often find we’re all tooting the same old horn. One that many don’t want to listen to.
Brent, you make a really good point. In the CU industry we tend to concentrate so much on the differences we ‘think’ people care about. Smallness, social responsibility, member-ownership, people before profits, education, etc. Believe me, I agree that these are differentiators that are important.
But when it comes right down to it, accessibility and return on investment rank so much higher in people’s minds. They will tell you social responsibility and the credit union ethos are important but under their breathe they will ask “What’s in it for me?”
I am from British Columbia, Canada. BC has arguably one of most robust credit union systems in the world with big-name players like Vancity (355,000 member with $12.3 billion in assets under administration) and Coast Capital Savings (360,000 members and $8.8 billion in assets under administration). The credit union system here just signed-up its 1.5 millionth member in 2006 in a province of just over 4 million people. It is an awesome environment to live in for someone who loves the credit union movement!
But what really makes BC a dynamo is Credit Union Central of BC. Every credit union pools collective marketing dollars for a major annual campaign. There is also a marketing website (www.creditunionsofbc.com) that tells the CU story and helps potential members find credit unions and ATMs in their own communities. Check the TV spots to get a feel for the campaign.
After a major study that showed less than 35% of Canadians are aware that you can actually use other credit unions for service-charge free ATM transactions, it became very apparent that people were missing some key informations on credit unions. Accessibility has really risen to the top as a point that needs to be addressed.
Accessibility may be considered table steaks and why bother promoting it, but with awareness this low, you need to let potential members know that this is not an issue.
Full disclosure, my company Currency Marketing developed the website for CUCBC. The television commercials were developed by Wasserman and Partners advertising. My point here is not to drum up business, but to bring to light a thriving CU environment and a working example of what you are talking about here. It can really work. Just look North for an amazing example to follow!
Brent, great points! One of the biggest hurdles I think the credit industry faces is knowledge of what a credit union is. I can’t tell you how many people look at me blankly when I say I work for a credit union. I use their ignorance as an opportunity to educate and inform. Light bulbs go off and their eyes light up when they learn they can join most credit unions, our fees are lower, our rates are higher, you can do your transactions at thousands of credit unions nationwide, etc…
But the credit union industry needs to start with the basic, what is a credit union and why would you want to do business with one. I love that many states are creating collaborative advertising including Washington. I do think this will start to make a difference, especially if we are consistent, put a lot of resources behind it and don’t let up.
Thanks for you continued great blog subjects.
Last week in Seattle I saw a bus with an ad from BECU and then a banner in a window of GHCU that basically said the same thing “Now anyone in Washington can bank with us!”
Whooopeee!! Now WHICH credit union do I choose? BECU has more branches. See our problem?
Common bond, however, served us well for 70 plus years and it seems we are quick to toss that out in favor of community charter and the hope of growth.
Now credit unions are competing not with banks, but with each other. Collaborative marketing isn’t going to help that.
I still say, “Don’t cheat on your sponsor if you don’t have to.”
When did exclusivity become a bad thing?
“When did exclusivity become a bad thing?”
When it doesn’t provide you a sufficient market to grow your business in both the short- and long-term. That’s when.
I’ve wondered why CU membership and overall CU “share of wallet” hasn’t skyrocketed since deregulation allowed CUs to compete in the marketplace.
A handful of CUs, mostly mega-sized institutions, have clawed some market share away from banks but, unintentionally, also claw some wallet share away from other CUs. I don’t believe mega-size CUs intended this when they advertise “anyone can join!”
Scot makes an excellent point—“that credit unions haven’t figured out what really makes them ‘different”. They can think they are different because of their history or that they have members not customers. We tend to market the ‘heart’ aspects instead of the ‘smart’ aspects of the credit union. I’m also from BC and it was tough to get people to think about a province wide campaign from the ‘smart’ (accessibilty) angle. But then there a number of different dimensions in play in areas such as that.
We have passed by opportunity after opportunity because some asked us to dance around the co-operative flag pole one more time instead of making a better (read non-political) business decision. Nobody dances around that flag anymore.
So the question every CU needs to ask is are we relevant to our members, and are we relevant to the marketplace. IF you don’t know the answer to that, well watch out for the tigers! He is always hungry.
Well said Ron: “its because of “passive decision making”. Big banks are the “easy” choice.”
The propsect asks him/herself: Is there a branch near my home AND work? What if I move, will I have to switch banks? Will I find an ATM when I really need one?
It’s their money and they want to feel in control, and it’s a tough sell for a lot of people to give up that kind of control in exchange for voting rights in elections they don’t care about.
Compare the ads from the BC credit unions ads referenced above (www.creditunionsofbc.com) to the newest round of cooperative credit union ads airing in Washington State (www.discovercreditunions.com) and I think you get to the point pretty quickly, The BC campaign does an excellence job of quantifying the “CU benefits” into an easily understandable customer benefit (I can access my account pretty much anywhere) while the Washington State campaign seems to be want to market the “CU difference” as an “ah ha” concept that as I see it leaves a potential member with (at best) a conceptual take away (in the interest of full disclosure I worked on the Washington campaign last year so I will leave it to someone else to “defend” this year’s campaign I’d love to hear what you have to say). The point I am trying to make is in line with those above, at the end of the day you need to give the consumer a tangible, simple reason to come into the CU tent. Anything else is us all just talking to ourselves.
Ed,
Tangible is the key. I agree. Playing the commodity game is dangerous (being the cheapest) and CUs will NEVER be as convenient (in the consumer’s mind) as big banks.
It’s so not about marketing campaigns. It’s about managing moments of truth. Banking is an errand. For the most part it’s pretty uneventful. Get in. Get out. Nobody gets hurt.
Where credit union’s competed for years was on the simple recognition of their members. They knew them by name. The branch was a gathering place, not an errand. And that came with exclusivity.
Ron, you’re right to a point. If the company went away, the exclusivity obviously did too. BUT, too many credit unions give it up when they don’t have to. And as Ron so aptly stated, we start stealing from each other, not the banks.
Back to marketing: “Now everyone in Washington can bank here!!”
Can you imagine WaMu putting up a sign like that? Or B of A? That’s NOT a differentiator or a call to action or a unique selling proposition or any of those marketing buzz words. It’s absurd. And kind of sad.
Credit Unions need to STOP relying on marketing to build their brand and START managing the experience. We’ve taken our eye off the ball in my opinion.
Denise. Thank you for your comments! It looks like you cover a lot of this on your own website and I agree that building relationships is what it’s about. There is a great article about this as it relates to marketing at http://www.pbs.org/wgbh/pages/frontline/shows/persuaders/themes/brand.html.
I agree, all the elements (the marketing, the service, how clean the restrooms are, how far away did I have to park) are “touchpoints” for the overall experience. They ALL matter.
Ed,
Great article!! Thank you so much for that link.
My last “real job” (as my mom would say – before I became self-employed) was with 1st Technology CU. I changed my title from VP Marketing to VP Cult-ivation. I knew traditional marketing was dying, and that the role of marketer was to create a cult-like devotion to our company.
Apple has done it. I’m such a follower of their cult I’m considering getting their logo tattooed to some body part. Haven’t decided yet…....but YES – it’s all about the experience!